Thread by Sieva Kozinsky
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- Aug 28, 2022
- #Investment #Startup
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I’ve made 80+ angel investments, including a $25k check now worth $1.5M and a $33k check now worth $3M.
10 lessons I wish I’d known before getting started:
10 lessons I wish I’d known before getting started:
Lesson: Don’t Angel Invest
Let’s start here. If you aren’t comfortable losing the money, don’t angel invest.
It’s a bad asset class!
You’ll likely lose all of your money.
But if you have the capital the risk and learning potential *might* be worth it.
Let’s start here. If you aren’t comfortable losing the money, don’t angel invest.
It’s a bad asset class!
You’ll likely lose all of your money.
But if you have the capital the risk and learning potential *might* be worth it.
Lesson: Create Value for Founders
Support your startups by:
• Introducing the founders to investors
• Finding potential customers and partners
• Helping the team track down high-quality talent
Create value and they will refer you to other great founders.
Support your startups by:
• Introducing the founders to investors
• Finding potential customers and partners
• Helping the team track down high-quality talent
Create value and they will refer you to other great founders.
Lesson: Don’t Invest In Your “Passion”
I see a lot of investors try to do this.
In theory, it’s a good idea.
But it limits the pool of companies you invest in.
Invest in companies with the best businesses OR the best talent.
I see a lot of investors try to do this.
In theory, it’s a good idea.
But it limits the pool of companies you invest in.
Invest in companies with the best businesses OR the best talent.
Lesson: Take Your Time
Angel investing is stressful.
Startups often need cash fast so they can fuel growth.
Don’t fall victim. Take your time when making investments.
Never get pressured into investing before you’ve done the work and have independent conviction.
Angel investing is stressful.
Startups often need cash fast so they can fuel growth.
Don’t fall victim. Take your time when making investments.
Never get pressured into investing before you’ve done the work and have independent conviction.
Lesson: Invest In People
My best investments are ones in which I’ve prioritized talent first and market second.
Don’t invest solely in an idea or vision.
Invest in high-quality talent, tackling a problem in a large market.
My best investments are ones in which I’ve prioritized talent first and market second.
Don’t invest solely in an idea or vision.
Invest in high-quality talent, tackling a problem in a large market.
Lesson: Prioritize Industries With Incredible Scale Economies
Yes to software.
No to eCommerce
D2C is a minefield of dead bodies and negative cash cycles.
Yes to software.
No to eCommerce
D2C is a minefield of dead bodies and negative cash cycles.
Lesson: Invest Alongside Tier 1s
The best startups attract the best investors.
Here are some examples of funds to invest alongside of:
• Sequia
• a16z
• Founders Fund
• Accel
• Index
Easier said than done, but their involvement is often an accelerator.
The best startups attract the best investors.
Here are some examples of funds to invest alongside of:
• Sequia
• a16z
• Founders Fund
• Accel
• Index
Easier said than done, but their involvement is often an accelerator.
Lesson: Identify Product-Market Fit
All startups are looking for product-market fit.
But you need to look for it as an investor as well.
Here are some signs of PMF:
• Selling a few contracts
• >100% net revenue retention
• Customer support bottlenecks
Invest behind PMF!
All startups are looking for product-market fit.
But you need to look for it as an investor as well.
Here are some signs of PMF:
• Selling a few contracts
• >100% net revenue retention
• Customer support bottlenecks
Invest behind PMF!
Lesson: Invest In Crazy Ideas
Ordering a taxi from your phone sounded ridiculous before Uber.
Staying at a random person’s home seemed absurd before Airbnb.
But look at these companies today.
The best investments often sound crazy at first.
Ordering a taxi from your phone sounded ridiculous before Uber.
Staying at a random person’s home seemed absurd before Airbnb.
But look at these companies today.
The best investments often sound crazy at first.
Lesson: Make Yourself Stand Out
You need a clear advantage for the best founders to pick you as an investor.
A few ways to stand out:
• Build domain-specific knowledge
• Share ideas publicly
• Build an audience online
@naval has shared great wisdom here in the past.
You need a clear advantage for the best founders to pick you as an investor.
A few ways to stand out:
• Build domain-specific knowledge
• Share ideas publicly
• Build an audience online
@naval has shared great wisdom here in the past.
TL;DR
Lessons I wish I knew before angel investing:
• Don’t Angel Invest
• Create Value for Founders
• Don’t Invest In Your Passion
• Be Patient
• Invest In People
• Prioritize Scale Economies
• Invest w/ Tier 1s
• Find PMF
• Pick Crazy Ideas
• Stand Out
Lessons I wish I knew before angel investing:
• Don’t Angel Invest
• Create Value for Founders
• Don’t Invest In Your Passion
• Be Patient
• Invest In People
• Prioritize Scale Economies
• Invest w/ Tier 1s
• Find PMF
• Pick Crazy Ideas
• Stand Out
If you enjoyed learning about angel investing, do me a favor and:
1. Follow me @SievaKozinsky for more
2. RT the tweet below to share this thread with your friends
1. Follow me @SievaKozinsky for more
2. RT the tweet below to share this thread with your friends
